NEW ORLEANS, La. — Falling commodity prices and a strong U.S. dollar are taking a financial toll on American farmers.
Net farm income fell 54 percent between 2013 and 2015.
“It is expected to drop by even more this year,” said Chip Bowling, president of the National Corn Growers Association.
“This represents the largest decline in the farm economy in 100 years.”
Corn prices have fallen 34 percent since 2010, and the strong U.S. dollar is hampering exports of the crop. Meanwhile, the price of inputs has not declined as rapidly as commodity prices.
Read Also
China’s grain imports have slumped big-time
China purchased just over 20 million tonnes of wheat, corn, barley and sorghum last year, that is well below the 60 million tonnes purchased in 2021-22.
“Most corn farmers are well past the point of prices being well below the cost of production, and they have been for some time now,” Bowling told reporters attending Commodity Classic 2016.
“For those of us who remember farming in the 1980s, this is troubling and concerning.”
He pledged that the association will continue fighting for a strong safety net program to protect growers from the downturn in the farm economy and that it will do everything in its power to boost corn demand and consequently corn prices.
Corn prices are the linchpin for all commodity prices, so what happens south of the border has serious implications for Canadian growers.
Last year, U.S. farm groups fought off an attempt by Congress to cut $3 billion from the crop insurance program.
“This is not the time to put the farm safety nets in jeopardy,” said Bowling.
U.S. agriculture secretary Tom Vilsack said the farm economy is not in as bad shape as farm groups are portraying.
Net farm income plunged 38 percent last year, but a closer look at the numbers revealed that incomes for farmers with sales exceeding $350,000 were up slightly. That category encapsulates 15 percent of farmers and 85 percent of production.
Median total household income for U.S. farms fell to $78,123 in 2015, down from the record $80,620 in 2014. It is expected to rebound to $81,666 this year.
Vilsack also noted that the average farm has a healthy debt-to-asset ratio.
“People are suggesting that this is like the 1980s. The debt-to-asset ratio in the 1980s was more like 22 or 23 percent. Today it’s 13 percent, and I think the record is like 11 (percent),” he told reporters after addressing the conference.
“We’re still in a pretty good place.”
Bowling is concerned about bloated corn ending stocks weighing down prices for some time to come. The U.S. Department of Agriculture is forecasting a hefty 46.7 million tonnes of carryout.
The corn growers association is focused on ways to reduce that carryout by building demand for the crop.
“Ethanol is the most important driver for future growth of corn demand,” he said.
The association is helping fuel retailers build the pump infrastructure required for higher ethanol blends.
“We’re also pushing for changes that would give every American year-round access to E15,” said Bowling.
He said corn growers will continue to fend off attacks on the U.S. Renewable Fuel Standard, including taking the U.S. Environmental Protection Agency to court for violating the standard when setting its volume obligations for 2014-16.
The association is also exploring new uses for corn and improving the crop’s nutrient composition.
“We want to build demand for our product so that it’s profitable enough we don’t need to have (subsidy) payments,” said Bowling.
